Socialism is an economic system characterized by social ownership of the means of production and co-operative management of the economy, and a political philosophy advocating such a system. "Social ownership" may refer to cooperative enterprises, common ownership, state ownership, or citizen ownership of equity. There are many varieties of socialism and there is no single definition encapsulating all of them. They differ in the type of social ownership they advocate, the degree to which they rely on markets or planning, how management is to be organised within productive institutions, and the role of the state in constructing socialism.

A socialist economic system would consist of a system of production and distribution organized to directly satisfy economic demands and human needs, so that goods and services would be produced directly for use instead of for private profit driven by the accumulation of capital. Accounting would be based on physical quantities, a common physical magnitude, or a direct measure of labour-time in place of financial calculation. Distribution of output would be based on the principle of individual contribution.

As a political movement, socialism includes a diverse array of political philosophies, ranging from reform-ism to revolutionary socialism. Proponents of state socialism advocate the nationalization of the means of production, distribution and exchange as a strategy for implementing socialism. In contrast, libertarian socialism proposes the traditional view of direct worker's control of the means of production and opposes the use of state power to achieve such an arrangement, opposing both parliamentary politics and state ownership over the means of production. Democratic socialism seeks to establish socialism through democratic processes and propagate its ideals within the context of a democratic system.

Modern socialism originated from an 18th-century intellectual and working class political movement that criticized the effects of industrialization and private property on society. In the early 19th-century, "socialism" referred to any concern for the social problems of capitalism irrespective of the solutions to those problems. However, by the late 19th-century, "socialism" had come to signify opposition to capitalism and advocacy for an alternative system based on some form of social ownership. Orthodox Marxists later considered scientific assessment and democratic planning to be critical elements of socialism. In the late 20th century, the term "socialist" has also been used by Third way social democrats to refer to an ethical political doctrine focusing on a common set of values emphasizing social cooperation, universal welfare, and equality. It is used in this way by Third Way proponent Anthony Giddens, who rejects conventional definitions and implementations of socialism.

During the course of the 20th century, states run by Marxist-Leninist parties implemented various economic systems. The Soviet Union and the Eastern Bloc established centrally planned economies, while Yugoslavia instituted a form of self-managed market socialism. Following the collapse of the Eastern bloc, China and Vietnam implemented reforms that culminated in a model called the socialist market economy, which consists of state-ownership and open-markets for both capital goods and consumer goods. It is always being revised, but in the end it ultimately fails.